The Internal Revenue Service has agreed to pay $43 million in bonuses to employees under an agreement with the National Treasury Employees Union, the union said today.

The bonus payments are $32 million short of what the union said employees were owed under their contract.

The bonuses became a political issue last year when Sen. Charles Grassley of Iowa and others urged the tax agency not to pay them amid broader federal budget cuts and the controversy surrounding the agency’s scrutiny of politically oriented tax-exempt groups.

Colleen Kelley, the union president, said in a statement that the agreement was a better alternative to litigation.

“While it was difficult to accept this reduction in the total amount of the awards outlined in our contract, I felt that given the current financial pressures facing federal employees, it was better that they receive their payments rather than wait for a protracted period,” she said.

Sen. Orrin Hatch, a Utah Republican and ranking member of the Senate Finance Committee, called the decision “outrageous.”

“It’s hard to think of a group of people less deserving of bonuses than IRS employees,” he said in a statement.